Whatever the final detail of the federal government's carbon emissions trading scheme — the framework of which is contained in the green paper released by climate change minister Penny Wong on July 16 — there's one thing we can be sure of: it won't be of much use in cutting Australia's carbon emissions.
For a start, no carbon trading scheme by itself can succeed in reducing greenhouse gas emissions at the speed needed to avoid climate catastrophe.
That's not because it's impossible in theory: If the government set total allowable carbon emissions low enough, the price of carbon could theoretically climb high enough to force carbon-intensive industries out of existence, or into rapid conversion to sustainability. Long before that point were ever reached, however, the industries in question would have blackmailed into surrender any government threatening to apply such a limited cap.
And surrender is what Prime Minister Kevin Rudd and Wong have done in spectacular fashion, capitulating to the big energy-guzzling corporations before a cap and a starting price for carbon have even been contemplated. In their Carbon Pollution Reduction Scheme green paper, 30% of rights to pollute ("Australian emissions units") will be handed out free to the biggest polluters.
The dirtiest polluters in the "trade-exposed" sectors (like aluminium) have been guaranteed at least 90% of their emissions until 2020, from which date their emission rights will be "phased out" over five years. So, the big polluters are more or less exempt from any significant change until 2025.
In addition, the biggest polluter of all — coal-fired power — will receive special financial assistance. This includes one-off "compensation" payments to power stations built before June next year, with the size of the payments being negotiated with individual generators. (It seems that the NSW government can now breathe easily at the thought that the electricity industry won't lose value ahead of its planned privatisation.)
The Garnaut Climate Change Review draft report released on July 4 proposed that all permits to pollute be auctioned from the outset of the scheme. However, the green paper offers only a vague commitment to move to 100% auctioning over time, leaving the three biggest carbon polluters — power generation, road transport and agriculture — to carry on unconstrained by any increase in carbon price.
Clive Hamilton, author of the global warming classic Scorcher, said that the Rudd government "has been completely snowed by the arguments and threats of the generators".
According to Hamilton, "any form of compensation or concession for coal-fired generators — who for a decade willfully failed to adjust to the inevitable — is ethically indefensible. Most importantly, the proposals for compensation will fatally undermine the effectiveness of the system by removing the incentive for behavioural change."
The mega-polluters — in some cases backed up by "their" trade unions — put vast effort into convincing the Rudd government that the Garnaut proposal would place them at severe risk from foreign competition, especially as their overseas rivals would face no parallel carbon cost. Now, having got their swag of rights to pollute from Rudd, they will have a vested interest in making sure that these are extended for as long as possible, and that their rivals in other economies are also exempted.
The handouts for the big polluters also mean there will be fewer resources for compensating working people and people on welfare, and for developing vital anti-greenhouse infrastructure like public transport. The Business Council of Australia has already said that businesses will pass on any cost increases arising from the scheme to consumers, and government modelling and the Garnaut review both indicate that low-income households will be hardest hit.
While a price for carbon dioxide emissions won't be set until next year, the green paper states that a price of $20 a tonne would result in household electricity costs increasing by 16%, gas bills increasing by 9% and overall living costs increasing by 0.9%.
Ironically, protecting some sectors from the need to move to sustainable sources of energy will impose greater costs on the majority and on cleaner industry. That result was inevitable once the profits of the big polluters were accepted as sacrosanct.
The green paper is a retreat from Ross Garnaut's draft report in the area of funding energy sustainability. Garnaut would have earmarked $3 billion or 20% of auction revenue from permits to pollute (whichever was greater) for investment, and research and development, in environmentally sustainable technologies. The only technology emphasised in the green paper is carbon capture and storage (as assistance to the coal industry).
The sad excuse for a carbon trading scheme outlined in the green paper is already leading many commentators to dream a double fantasy. The first part is that Rudd and Wong have shrewdly soft-pedalled their proposal in order to lure all the "stakeholders" to accept it in principle. Then — once everyone is on board and after the 2010 election — tight caps, a high carbon price and dwindling exemptions and compensation will be the rule.
This is daydreaming. Having won such massive exemptions from the government through brutal lobbying, what incentive do the big polluters have to change course? What force could the Rudd government rely on as a counterweight to their carbon thuggery, assuming it wanted to confront it?
The second part of the fantasy is that a carbon trading scheme adequate to deal with the global warming threat somehow exists, even if the Rudd government hasn't yet managed to locate it. In fact, carbon trading schemes can at best have only a secondary role in climate change policy.
Some point to the European Union's Emission Trading Scheme as an example of how an Australian trading scheme might work. However, the European Environment Agency calculates that by 2012, after eight years of operation, the overall emissions reduction due to the EU ETS will probably amount to around 3.4% of 1990 emission levels.
That's an emissions cut of only 0.4% a year over the life of the ETS. However, to reach the Rudd government's own target of cutting emissions by 60% by 2050, Australian emissions must be cut by 1.5% a year from now on.
What's more, the Rudd government target is itself inadequate, being based on allowing an atmospheric concentration of greenhouse gases of up to 550 parts per million (ppm). According to leading US climatologist James Hansen: "If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, carbon dioxide will need to be reduced from its current 385ppm to at most 350ppm."
It's no surprise, then, that the green paper fails to include a medium-term emissions reduction target. When that is finally released later this year it will become even clearer that the Rudd government is "Howard lite" on climate change; the target will either be pitifully inadequate or unachievable through the Rudd government's carbon trading scheme as presently structured.
There's a bullet that everyone concerned about global warming simply has to bite; that is, it is too big an issue for the capitalist corporations and the market to solve — they are an integral part of the problem.
So what would a "carbon pollution reduction scheme" worthy of the name have looked like? At the very least it would have:
required the big polluters to meet a tight schedule for cutting their greenhouse gas emissions, under pain of being closed down, with their workers retrained on full pay;
created a public agency to drive the implantation of energy saving and energy efficiency standards, and the conversion of the building stock to zero-carbon status;
laid out a timetable for phasing out fossil-fuel fired power generation;
announced a properly funded scheme to foster research, development and application of sustainable technologies and processes, with a view to achieving their mass application as rapidly as possible;
announced the upgrading and spread of rail networks to allow the shift of long-distance freight from road to rail; and
begun to tackle the problem of agricultural greenhouse gas emissions by announcing a plan to advance the carbon-absorption capacity of the land biosphere.
Such policies will only become part of the mainstream political agenda when a more powerful movement for serious global warming action develops. Last weekend's Camp for Climate Action in Newcastle and the July 5 climate emergency rally in Melbourne are examples that have to be multiplied.
[Dick Nichols is the national coordinator of the Socialist Alliance.]